The Seed Enterprise Investment Scheme (SEIS) relief is a tax relief offered to individuals who invest in small and early-stage companies through the SEIS program. The SEIS relief is designed to encourage investment in high-risk start-ups by providing investors with tax incentives.
Under the SEIS relief, investors can claim income tax relief of up to 50% of the amount they invest, up to a maximum investment of £100,000 per tax year. This means that if an investor invests £10,000 in a qualifying SEIS company, they can claim income tax relief of £5,000, reducing their income tax liability for that tax year.
In addition to income tax relief, investors can also benefit from capital gains tax and reinvestment relief. Capital gains tax exemption on any gains made on the SEIS investment, provided they hold the shares for at least three years. Furthermore, if the investment is unsuccessful and the company fails, investors can claim loss relief against their income tax liability. If you make a loss on a disposal of your SEIS shares at any time, you can set this loss against your chargeable gains. In computing the loss, you must reduce the cost of your shares by the amount of any Income Tax relief given and not withdrawn.
Overall, the SEIS relief is intended to incentivize investment in high-risk start-ups and provide much-needed funding to small and early-stage companies.
When you invest you should receive SEIS3 ‘Seed Enterprise Investment Scheme Certificate’, this form is provided to you by the company invested in to certify that certain conditions of the scheme are satisfied.
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